The Associated Press March 25, 2011, 2:53PM ET

WTO says US illegally taxes Brazilian orange juice

The World Trade Organization ruled Friday that the United States is illegally taxing about $2 billion a year of imported Brazilian frozen orange juice.

Brazil's victory comes after similar U.S. losses in trade disputes over how it applies its complex "zeroing" methodology -- calculations that are used to determine how much to punish imports suspected of being "dumped" at unfairly low prices.

Brazil is the world's largest exporter of frozen orange juice, selling mainly to the European Union and the United States. It filed the complaint in 2008 saying the U.S. artificially inflates the dumping margins. The U.S. has lost similar WTO decisions.

A WTO panel ruled that Washington's method used to calculate when orange juice was dumped, or sold at less-than-cost prices on U.S. markets, was illegal.

The ruling means that some U.S. antidumping duties imposed on imports of orange juice from South America's largest nation violated international trade rules.

The panel said the United States acted "inconsistently" by applying the zeroing methodology to set extra duties on Brazilian orange juice. The United States imports about $2 billion, or a fifth of all Brazil's orange juice exports.

Brazil's WTO mission in Geneva welcomed the ruling, saying: "The Brazilian government hopes that the United States brings its measure into conformity without delay, as a clear sign of respect to the multilateral trade disciplines."

The European Union also has challenged Washington's zeroing methodology.

The U.S. Commerce Department published a proposal in late December for ending some uses of zeroing -- and avoiding more trade disputes with the EU, Japan and other key trading partners.


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